The inordinate delay in capacity expansion of the smelter and power plants has deprived the Central public sector enterprise National Aluminium Company (Nalco) of earning thousands of crore of rupees when aluminium and alumina prices are sky high. A timely expansion would have almost doubled the company’s profit.
In fact, the Nalco growth story has been seriously affected amid serious mismanagement problems resulting in the delay in expansion of smelter and power plant.
The Nalco’s capacity is only 4.6 lakh tonne of aluminium against 21 lakh tonne of Vedanta and 13 lakh ton of Hindalco. Earlier, expansion plan of Nalco to 1 million tonne was approved by the Nalco Board at a cost of Rs 15,000 crore. Land adjacent to the existing smelter was given by the State Government promptly. Even, Nalco deposited land acquisition cost with the IDCO.
And a detailed project report on expansion has been completed and this expansion would have enabled Nalco to reduce its cost of production substantially which at present is the highest amongst the peers. But due to gross mismanagement, the project has been delayed. It has deprived at least 2,000 youths of Odisha of employment opportunities and additional tax revenues for the State. If expansion would have been made, it would also have facilitated value addition of alumina to aluminium in the State.
As the Nalco is under the Ministry of Mines, recently, Union Minister Dharmendra Pradhan urged the Union Mines Minister to expedite capacity expansion of Nalco's smelter plant at Angul. Pradhan in a letter to the Mines Minister requested to take necessary steps for increasing the smelter plant's capacity to 1 MTPA from existing 0.46 MTPA.
Notably, aluminium smelting is a highly power-intensive process and the feasibility of this brownfield expansion project is heavily dependent on a steady supply of affordable coal to the 1,400-MW feeder power plant for uninterrupted generation of power.
At present, the Nalco is selling alumina in a cartel export market where three to four traders call the shots. The cartelisation is evident as in last two years as almost not a single new party has been empanelled to participate in the tender.
Not only smelter expansion was stuck, but the proposal for setting up of downstream units in the Angul Aluminium Park and the Kamakhyanagar downstream cluster has been delayed. The Angul Aluminium Park and the Kamakhanagar downstream cluster would have created huge employment and business opportunities for the locals.
Similarly, the proposal on value addition by setting up of Wire Rode Mills-1 & 2 has also been delayed which has caused a huge loss of Rs 150 crore of revenue to the company.
Smelter expansion, a new power plant of 1,200 MW, two wire rode mills, Kamakhyanagar downstream project and Angul Aluminium Park with investments of around Rs 20,000 crore would have strengthened the Nalco against the ongoing bid for the company’s takeover.
As per a CAG report, earlier, the "governance deficit" of Nalco had resulted in many inadequacies, including delay in its Rs 4,091.51-crore second-phase capacity expansion project.
